How Can A .xxx/.sex Extension Be OK Now?

I have read hundreds of stories about ICANN voting to allow the creation of an unlimited amount of domain extensions in the mainstream media.  Each and everyone of these article talks about an adult extension .xxx/.sex or some other version as a foregone conclusion in terms of popularity among users and applicants.

The question is how can ICANN approve an adult extension now having turned down .xxx three times already?

On March 30, 2007, just over a year ago, ICANN rejected the .xxx extension for the third time on a 9-5 vote.

According to USA today, “”Nearly all of the board members who voted against approving the domain said they were concerned about the possibility that ICANN could find itself in the content regulation business if the domain name was approved.””

Paul Twomey, ICANN’S chief executive, said the decision came down to a number of factors, one of which was whether by creating an “xxx” domain, ICANN might be put in a position of having to enforce all of the world’s laws governing pornography.

According to cnet.com, ICANN in rejecting the .xxx proposal said that the extension “could raise significant compliance issues with law enforcement agencies around the globe, many of which have different laws governing pornography.”

Also ICANN cited the fact that the adult website community was opposed to the extension, as they feared that an .xxx TLD would result in governments restricting access to all sites in the domain, leading to a drop in traffic and revenues.

“There are credible scenarios that lead to circumstances in which ICANN would be forced to assume an ongoing management and oversight role regarding Internet content, which is inconsistent with its technical mandate”  ICANN said at the time.

And that time was just a little over a year ago.

Let’s not forget that the .xxx extension also drew opposition from the US Government, the American Civil Liberties Union, and many conservative religious groups.

So what has fundamentally changed, other than dollars, that would allow ICANN to now approve these extensions now??

Or maybe it is simply the dollars.

According to reports the application fees will range between 100K-500K per.

ICANN stated last week that its costs for the creating the infrastructure for the new extensions will be between $20-$30 million and these application fees would help them recoup that cost.

We know 2 things for certain that:

1.  Application fees will be non-refundable.

2.  If more than one application is received for a domain extension, the extension will be auctioned off and awarded  to the high bidder.

Lets say 5 company’s apply for .sex, another 5 for .xxx, another 5 for .porn and another 5 for .adult or some other like extension.

Let’s say the application fee is set half way between the estimates at $250K per.

That’s 20 applications at $250K or 5 million dollars right there.

But wait, for each extension there will be an auction.  Going in, each applicant has to know that it will take an amount into the seven figures to win one of these extensions.

Now ICANN is over 10 million and that’s just for the adult extensions.

Whose to say that ICANN will only approve one adult extension?

Why won’t they approve .xxx, .sex, .porn and .adult if there are multiple applicants for each of those extensions?

On the other hand maybe they won’t approve any.

Maybe nothing has fundamentally changed since last year that would allow an adult extension to be added.

When asked about the possibility of a .xxx domain name, this week Paul Twomey said simply that the new system would be “open to anyone”.

However note that under this system an “independent arbitration panel” could reject extensions based on “morality or public order” grounds.

So what if all the extensions are rejected by this yet to be formed or named “independent arbitration panel”.

What if the US government, which is currently against an adult extension, continues to be against it?

What if religious groups continue to voice outrage over an adult extension?

What if adult website operators who were largely against the .xxx application, continue to speak out against it?

If ICANN collects the application fees but the “independent arbitration panel” rejects them, that is not ICANN fault, right?

If applicants want to reapply the following year and pay the application fees again, well that could mean another 5 million into ICANN coffers, with the extension still being awarded on an auction basis.

Unless its turned down again.

This can be a real cash cow for ICANN.  They keep collecting application fees and have no blame or responsibility, when the extensions are rejected by the panel.

Finally,  what happens to all of ICANN statements last year about not wanting to regulate content, not being able to do so on a worldwide basis and all the other reasons they had last year in rejecting .xxx.

Have any of these issues been suddenly resolved?  Are the problem and questions still not valid?

Maybe an adult extension will not be the first to be awarded but the last.

Comments

  1. 777 Sunset Strip says

    Ever wonder why NetSol still has control over .com? Why ICANN gives greater leverage to registrars and registries? Also, why control over ICANN will likely
    be shifted from our Commerce Dept to … the UN or WIPO? It’s becoming a free (fee) for all and almost anything goes. The strange part is that I am not so
    opposed for the reason that we, the people, always wanted control and restrictions eased. More of a social, universal understanding. I think we are
    getting our wish. Now it is up to us to take control or the old impulses of industry will produce “survival of the fittest” mentality. We have our chance.

  2. MHB says

    Sunset

    Your post is interesting but this is the same body and group of people who said no to the same deal .xxx last year, how can they now say yes?

  3. says

    I see another potential problem too.

    If Company A has a trademark TM1 in Country C1.
    Another Company B has a trademark TM1 in Country C2.

    Both bid for the domain extension and either of them wins. can the loser sue ICANN for it?

  4. says

    Nice post and response.

    Time will tell what mess will come out with all the mambo jumbo domain name ext. which ICANN intends to approve – I can see lot’s of Legal Action against domain name owners being taken.

    Domain name owners should develop their domain names (place relevant content on it) and keep them away from the predators of company’s like Dell, Microsoft and MANY others.

  5. says

    I’ve been thinking about the same thing. Just because they’ve liberalized the rules doesn’t mean they will approve everything.

    And the draw for the .xxx registry promoters was all the money they’d make. You make a good point, if you get .xxx and .sex and a couple others, you’re not going to make nearly as much money due to dilution.

    @ 777 (first comment) VeriSign actually has control of .com, not NetSol

  6. Scott Kozlowski ("Koz") says

    Guys,

    Sorry, I haven’t been around to post comments.

    Mike, who the heck is going to plunk down 100K-500K knowing that they will have competition for .xxx and they will need to bid in the millions to win it, only to have it nixed (pulled back) by some oversight committee?

    Sounds eerily reminescent, doesn’t it?
    TUCOWS comes to mind.

    Are you sure it’s a non-refundable fee for all bidders?
    Maybe, it’s only non-refundable to the winning bidder.

    Anyhow, the adult industry on the net is the oldest and most established. The question I have is there more markets for them to tap into that would yield higher annual revenue or would this be a play by the smaller operators that have been trying to compete, but don’t have those killer generics like porn.com or sex.com?

    I think the later. They are the newer entrepeneurs that will adapt more quickly to market changes. As an established industry there is limited annual growth on the whole. This will just be competitors duking it out for a bigger slice of the pie.

    The question: “So what has fundamentally changed, other than dollars, that would allow ICANN to now approve these extensions now??”

    The dollars have always been there, that didn’t change.

    What might of changed is they have figured out how to get at those dollars. Maybe, they now have a deeper understanding of the industry they oversee.

    How could they be held legally liable for oversight of .xxx or .sex?

    They allowed xxx.com/.net/.org and sex.com/.net/.org!

    As far as I know, they haven’t been forced
    legally to oversee the whole adult industry on the net.

    How is this different???

    Maybe, legally it’s not. Maybe with the passage of time they’ve figured this out.

    If there aren’t any legal issues, then it stands in their best interest to auction these tld’s.

    They aren’t a non-profit company are they?

    Koz

    if it’s really likely that it they would be resposible for the content issues

  7. MHB says

    Scott

    ICANN is a non-proft organization, whose conduct is governed by their charter.

    The applicant who was turned down 3 times before for .xxx is still around and will be trying again for sure. ICM registry has spend into the seven figures already in the 7 years they have been trying to get the extension approved.

    The upside is so big, people will be applying.

    I think they last proposal was something like $60 a registration per year. Anyone with a good .com adult names would almost have to try to get the adult extension.

    Plus if they hold back and auction off the top 1,000 domains, what do you think someone would pay for sex.sex or sex.xxx??

    As far as a change of heart by ICANN as to what their purpose is and what they can do and cannot do by their charter, nothing has changed in the last year to get them to make such a change.

    Moreover all the other issues raised, and discussed in rejecting the .xxx application are still present.

  8. Scott Kozlowski ("Koz") says

    Sorry!

    To continue…

    If it’s really likely that it they would be resposible for the content issues of .xxx or .sex then I think they would just leave it lay for awhile. There’s no hurry to try and get at these dollars, now.

    This whole issue might be a moot point, at the present time.

    They’ve figured out how to get at a huge revenue stream with generic tlds.

    Why would they need those legal problems when they’ve got all those great generic terms that will end up going to auction for millions?

    They’ve got another huge stream of $ that will come in from corporate America.

    This will be a totaly separate revenue stream as corporate America takes their brands an moves them to the right of the dot.

    There won’t be an auction for .coke or .nike, but there are some brands that are also generic that could yield huge numbers from auction like .apple

    ICANN’s really got their work cut out for them. The hard part is going to be managing the growth as these new revenue streams start ramping up!

    Things are starting to get really interesting!

    Koz

  9. Scott Kozlowski ("Koz") says

    Mike,

    Something must have changed! Why would they want all this?

    We’re talking about huge revenue streams here. With that there is a mind boggling amount of work to be done to accomodate all of that. Alot more people to manage, infrastructure, etc…

    Maybe, we need to dig deeper…somebody stands to make alot more money at ICANN for them to open up the tld’s like this. Compensation pkgs must be tied with revenue. Nobody creates more work for themselves only to make the same amount of money!

    Your question,
    “Plus if they hold back and auction off the top 1,000 domains, what do you think someone would pay for sex.sex or sex.xxx??”

    Huge numbers in the tens of millions, I know.

    But, ICANN doesn’t get those millions.

  10. MHB says

    No ICANN doesn’t those millions when premium domains are sold off, but owing a a registry that can do so makes the registry that more valuable which is why ICANN will get millions of dollars for many extensions after auctions are held.

    Many top extensions may go for 5M+ into the eight figures.

    And they only need to cover 30 million in costs.

    My point about the adult extensions is if they will not be approved, how can ICANN stand back and collect application fees for the extensions, knowing that they won’t be approved.

  11. Scott Kozlowski ("Koz") says

    If nothing has changed on this front, they shouldn’t need that money.

    For all the reasons I stated already. They have created two new huge revenue streams. They should be focusing on these. You can look at adult tld’s as a separate issue, a separate “potential” revenue stream. It could be hundreds of adult tld’s. Don’t forget all the foreign language adult tld’s. Eg: .sexe or .geschlecht or .sexo

    They don’t need to address this for years. But, if they do it just seems crazy. I realize that co’s like ICM registry stand to gain tens of millions in additional revenue, so I get why they want .xxx

    Legally can they get away collecting 250k from those 20 or more co’s every year with the hope that one of those years it will be approved. I don’t know, you would have more insight than I on that front.

    Is it ethical? I think you know what my position is going to be on this. Absolutely not!!!

    Seems like we are seeing alot of unethical people in this industry in positions of power.

    If co’s like ICM let that happen to them year after year…I don’t understand the logic behind it. I understand the numbers, but why do this each year if it keeps getting rejected? I understand the potential, but how do they win?

    Koz

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